Nuke law recast expected to cap supplier liability

Economic Times

10 hours ago

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India is considering a total recast of laws governing atomic energy , including the Civil Liability for Nuclear Damage (CLND) Act, said people familiar with the matter. In particular, the revamp will seek to address the open-ended liability of suppliers under the current law as the Centre seeks to rope in private investment.India aims to expand its nuclear energy capacity to 35-40 GW by 2035 and 100 GW by 2047. Policymakers are of the view that the laws require changes if the target is to be met. India currently has 22 operating reactors, with an installed capacity of 6,780 MW. 'Instead of multiple piecemeal changes, there is a thinking that the laws be rewritten completely,' said one of the persons cited.The Atomic Energy and CLND Acts were introduced in the context of a state-owned nuclear thrust. Now, however, 'The idea is to encourage private sector participation and not discourage it,' the person added.The liability law, envisaged as a safeguard against fallout after any accident, has been a long-standing concern of potential investors.Currently, Section 6(1) of the CLND Act caps the total liability for each nuclear incident at 300 million special drawing rights, a reserve asset defined by the International Monetary Fund and equivalent currently to Rs 3,700 crore.Section 6(2) sets the operator's maximum liability at Rs 1,500 crore.But suppliers' worries stem from Section 17, which allows for a potentially large liability. This states that the operator will have recourse to liability claims where 'the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with latent defects of substandard services.'This imposes unlimited liability on a supplier, said one of the persons cited.'A supplier may be sourcing or subcontracting various inputs from other suppliers,' the person said. 'Besides, a plant has several components and so liability cannot be that of a single supplier.'According to ongoing deliberations, the liability of a supplier to a nuclear operator would be capped at a certain defined value. Some liability beyond that amount would likely be assumed by the government, said a third person.A nuclear fund could be created as proposed in the current CLND, but with a more defined contribution from the operator that could be based on each unit of power generated.'Hectic drafting exercise is on, along with discussions,' the person said. 'These would also be discussed with stakeholders before being put up for the Cabinet nod.' The government is keen to get the legislation through the Parliament in the current calendar year, he added. An inter-ministerial committee is firming up changes to the framework.The proposed recast would also take into account global best practices and conventions to which India is a signatory. While India has signed the Convention of Supplementary Compensation (CSC), it's yet to ratify the accord.